Former Aegis Advisor Steven Luftschein (Steven Lerner) Reportedly Barred from Securities Industry
According to the Financial Industry Regulatory Authority ( FINRA) on January 13, 2020, the regulator has reportedly barred former Aegis Capital Corp. advisor Steven Robert Luftschein (also known as Steven Lerner), after allegations that he churned and excessively traded the accounts of three of his customers.
FINRA says that Luftschein “executed approximately 430 trades in the customers’ accounts — resulting in annualized turnover rates ranging from 12.5 to 96.3 and annualized cost-to-equity ratios (or break even points) ranging from 35.6% to 123.8%,” from July 2014 through June 2016.
Luftschein’s alleged churning and excessive trading was purportedly unsuitable and caused combined losses of more than $261,000 in the Customers’ accounts, according to FINRA. At the same time, Luftschein’s trading in the Customers’ accounts reportedly generated gross sales credits and commissions of approximately $136,200, with Luftschein receiving a substantial percentage of this amount.
Further, during the same time period, Luftschein purportedly “executed 88 trades with a total principal value of approximately $3. 1 million in the three Customers’ accounts without the Customers’ prior authorization.”
According to his FINRA BrokerCheck report, Luftschein was registered with Aegis Capital Corp. in Melville, New York, from 2013 until December 2016. He was then affiliated with Joseph Stone Capital in Huntington, New York from 2017 until May 2018. He reportedly has 17 customer complaints on his broker report, with one still pending. Allegations include churning/excessive trading, unauthorized trades, and unsuitable investments among others.
For more information see FINRA case #No. 2016051704303.
What is excessive trading or churning?
When a broker engages in excessive trading of securities in a customer’s account without considering the client’s investment goals and primarily to generate commissions that benefit the broker, the broker may be engaged in an illegal practice known as churning.
Churning fraud is an illegal and unethical practice. The more a broker trades the more they get paid. In many cases this is enough incentive for unscrupulous brokers to over-trade in a client’s account.
Often churning fraud occurs when a broker has discretionary authority (either actual or implied) of a client’s account, meaning they do not need the clients consent to trade on their behalf. Churning may result in significant losses and exposes the client to unnecessary tax liabilities.
Filing a Complaint against your Brokerage Firm
Brokerage firms are required to adequately supervise their advisors. They must ensure they are complying with FINRA rules.
When brokers abuse client accounts and conduct transactions that violate securities laws, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
The brokerage firms can be held responsible for any losses in a FINRA arbitration claim if it is determined that they failed to properly supervise their agent.
If you are concerned about investments with Steven Lerner and Aegis Capital Corp., the securities attorneys at The White Law Group may be able to help you. For a free consultation with an attorney, please call (888) 637-5510.
The foregoing information, which is all publicly available, is being provided by The White Law Group.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois. For more information, please visit our website, www.whitesecuritieslaw.com.